2025 (11) TMI 1072

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.... in the Act for recording satisfaction giving rise to limitation question. As the facts are common we will narrate and consider the facts and findings of AY 2018-19 to decide both the appeals. 3. The facts, in brief, are that a search was conducted on the various premises of M/s Seven Seas Hospitality Pvt. Ltd. and residence of the directors on 03.05.2018. During the course of search proceedings various documents pertaining to alleged unaccounted sales were found. On the basis of these documents, details of year wise alleged unaccounted sales was worked out by the Ld. AO. During the course of assessment proceeding, assessee duly submitted that there are various duplicate entries, transactions not materialized, transactions does not pertain to sales. Ld. AO did not agree with the contention of the assessee company and determined the unaccounted sales of Rs. 12,31,57,395/-. Admittedly in the assessment order no satisfaction was recorded for violation of provisions of section 269ST and proposal for initiation of penalty proceeding u/s 271DA. 4. Then in response to notice u/s 274 r.w.s. 27 IDA dated 05.05.2022 for imposition of penalty of Rs. 17,22,76,762 u/s 271DA on the basis o....

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....submitted by the appellant before the JCIT that as per judgement of Hon'ble Supreme court in the case of Jai Laxmi Rice Mill (supra) it has been held by the Hon'ble supreme court that for imposition of penalty u/s 271D there has to be a satisfaction in the Assessment order for initiation of penalty proceeding u/s 271D. 7. We find that these contention have been duly appreciated by the ld. CIT(A), and relevant observations are reproduced hereinbelow; "6.2 The Penalty proceeding u/s 271D and u/s 271IDA are pari materia as both are related to the mode of receipt of the money and purpose of the both the penalty is to reduce the generation of the cash in the market as as well as to avoid cash transactions. So the above said judgment of hon'ble Supreme Court squarely apply in the case of penalty u/s 271DA also. With regard to CBDT circular Dated 26.04.2016 it is submitted that, it is based on the judgment of the hon'ble Kerala high court in the case of Grihalaxmi Visions Vs ACIT Kozhikode dated 07-08-2015 in ITA No 83 and 86 of 2014. In this circular the judgment of Hon'ble Supreme Court which is dated 20.11.2015 and after the date of judgment of the Kerala High Court, has no....

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....& 271DA are pari materia and the judgement of the Hon'ble Supreme court as cited supra will apply with equal force in the case of penalty proceedings u/s 27 IDA which is in violation of provisions of section 269ST. 6.4.3 Further in the circular there is reference of the judgement of the Hon'ble Kerala High court in the case of Grihalaxmi Visions vs ACIT Kozhikode dated 07/08/2015 ITA no. 83 8s 86 of 2014. In the circular the judgement of the Hon'ble Supreme court as cited Supra which is dated 20/09/2015 i.e. after the date of the judgement of the Hon'ble Kerala High court dated 07/08/2015, has not been considered. 6.4.4 The assessee also submitted that CBDT circular cannot override the judgement of the Hon'ble Supreme court. 6.5 I have considered the fact of the case, the legal contentions raised by the assessee through the above said ground, the written submissions made in this regard, and the order passed by the JCIT. 6.5.1 The assessment order in the present case has been passed on 15/07/2021 by the DCIT Central Circle 30, New Delhi. 6.5.2 From the review of the assessment order it is observed that in the assessment order no satisfact....

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....rned and not date on which SCN was issued - Held, yes- Whether, since Assessing officer initiated penalty proceedings in December, 2008 and six months from end of month in which action of imposition of penalty was initiated expired on 30-06- 2009, penalty order passed on 29-09-2009 was barred by limitation - Held, yes (Para 12) [In favour of assessee]" 6.5.7 In the case of CIT vs Jai Lakshmi Rice Mills the Hon'ble Supreme court has held that even if the assessment order has been set aside with direction to frame the assessment de novo, in this situation even in the fresh assessment order passed, satisfaction with regard to penalty proceedings u/s 271E should be recorded. The relevant extract of the judgement is reproduced herewith for reference. "Para 4 The tribunal as assessee as the High court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under section 271E would also not survive. This according to us is the correct proposition of law stated by the High court in the impugned order. " "'Para 5 As....

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....eedings, arrives at a finding that here has been a violation of the provisions, like in the present case, of Section 269SS, there will not be any occasion to the Joint Commissioner, who is not the Assessing Officer, to exercise his jurisdiction to levy Penalty under Section 271D. Following the decision of the Hon'ble Supreme Court in the case of Jai Laxmi Rice Mills referred supra, assessee set aside the order passed under Sec. 271D of the Act." 6.5.9 Further, the Hon'ble High Court of Karnataka in the case of JCIT v. Smt. S.B. Patil ITA No.200004/2016 dated 26.03.2018 has also folloassesseed the judgment of the Hon'ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills cited supra. The relevant para of the decision is reproduced as under:- "5. In the present case, the penalty under Section 271E of the Act was imposed on the respondent -Assessee Smt. S.B. Patil, Proprietor, Adarsha Dairy Farm, Ainapur, District Vijaypur, by the Income Tax Officer, Ward No. 1, Vijayapura. Hoassesseever, the said penalty of Rs. 57,77,213/- for allayed violation of Section 269T of the Act was reduced by the First date of order 26.03.2018 ITA No.200004/2016 The Joint Commission....